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Does the World Bank Want to Green Ethiopia’s Textile Industry?

Now that it’s pivoting away from a largely agrarian economy, Ethiopia is poised to become a manufacturing force to reckon with.

As plans to build 30 industrial parks in Africa’s second-most populous nation continue apace, rumor has it that the World Bank is seeking contractors who can improve the resource efficiency, lower production costs and minimize the environmental impacts of Ethiopia’s textile mills in a bid to attract and retain investment.

The news comes courtesy of Apparel Insider, which claims to have laid eyes on a Request for Proposal that reveals designs to that effect. 

“Industrial parks will be a key focus of the World Bank project as they are the main tool being used by the government to develop the textile and footwear industries and are central to Ethiopia’s industrialization strategy,” wrote Mark Lane, a reporter for the publication.

Quoting the tender document, Lane said the initiative will “contribute to the decrease of greenhouse-gas emissions through the removal of regulatory barriers to the implementation of energy-efficiency and water-efficiency investments in the private and public sectors.”

By providing support to the government and relevant industries of sector-specific interventions, the project will also ensure that Ethiopia’s textile and footwear industries “remain competitive while the growth of the sectors is environmentally sustainable,” he added.

Despite gross domestic product growth that decelerated from 10.9% in fiscal year 2017 to 9.6% in fiscal year 2018, Ethiopia remains one of the fastest-growing economies on the continent and indeed the world, according to the World Bank, which is investing in the country for the first time since it suspended budgetary support in the wake of the violent and disputed 2005 election.

In August, Abiy Ahmed, Ethiopia’s 15th prime minister, announced that the financial institution would be providing the Horn of Africa nation with $1 billion over the next few months—a move that Ahmed said had everything to do with his administration’s economic and political changes.

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“This is due to the reforms taking place in the country,” said Ahmed, who took office in April, at a news conference.

Challenges for the country still abound, however. A World Bank report this past June urged Ethiopian authorities to “maintain tight macroeconomic policies, improve external competitiveness, curb structural imbalances and expand the role of the private sector” to sustain growth.

Strategic service sectors such as telecommunications, utility and air and sea transport currently operate as strict monopolies, the report noted, while professional and other backbone services are not being promoted to the fullest extent of their competitiveness and “value addition.”  

“Although a wholesale services policy reform in Ethiopia’s current environment would be neither feasible nor desirable, several significant steps could be taken to open-up markets, increase economic efficiency and meet people’s expectation for improved services,” said Carolyn Turk, World Bank country director for Ethiopia, Sudan and South Sudan. “Meaningful reforms will help expand manufacturing, boost job creation, enhance food security and promote economic diversification among other things.”

But things appear to be shifting—surely, if slowly.

On Sunday, Ethiopia inaugurated the Adama Industrial Park just outside the capital city of Addis Ababa, giving the country’s already-burgeoning textiles and apparel sector an additional boost. The country’s Industrial Parks Development Corporation says it expects to wrap up construction on seven more parks around the country this year.